Edmonton Tax Accountant | Incorporating To Help Save Money

One of the first things that business owners should do to take advantage of this lower tax rate once they incorporate says Edmonton tax accountant, is use it to help save money in their business. The way a business owner would do this, is by the smaller tax rate that they are paying, can allow them to put more money towards their savings. For example, if the business owner is putting $1000 a month into savings, they would get taxed at 48%, allowing them to only save $520 a month. If the business owner puts the same amount of money on to savings once they incorporate, they be able to only have to pay 11% in taxes, meaning that they would pay $890 a month in savings, which is an additional $370 every single month. This can mean that business owners can save up in order to buy assets much faster in their business. Edmontons tax accountant says that this is extremely important, because as businesses age, the cash crunch potential in their business means that they are less likely to qualify for financing, meaning in order to replace equipment, or grow their business they need to have the cash available in their business. By taking advantage of the lower tax rate, can help businesses do just that.

A business owner can utilize this exact strategy in order to put more money into their investments, as well as eliminate their debt quicker. Edmonton tax accountant says a business owner will be able to significantly impact not only their business but their personal life by utilizing this lower tax in order to save money, pay debts and accumulate wealth for the future.

There are other secondary benefits that business owners can enjoy is a part of incorporating and they include says Edmontons tax accountant having a limited liability in their business, protecting their tradename, be able to qualify for loans easier, give their business and amount of legitimacy, and be able to get hired as an independent contractor by companies who will not hire independent contractors who are not incorporated.

Entrepreneurs who are not incorporated are missing out on significant opportunities not only to pay much less in taxes says Edmonton tax accountant, but are not able to effectively strategize with their accountant to minimize taxes and effectively tax plan in their business. The personal tax rate in Alberta is currently the highest marginalized tax rate at 48%, which is up 9% from the last rate which was 39%. There seems to be no end to the amount of taxes that Albertans seem to pay. On the other hand says Edmontons tax accountant, the small business tax rate in Alberta is 11%. Business owners must be incorporated in order to get this rate. There are also many other benefits that business owners can enjoy simply from incorporating their business.

By incorporating their business, business owners will be able to use the lower tax rates in order to save money in their business. The way they would do that says Edmontons tax accountant, is by allowing businesses to pay lower taxes and therefore be able to put more money towards savings. For example, if the business owner had $1000 to put into their savings, they would have to pay 48% of the personal tax rate if they were not incorporated. That means a business owner would only be able to put $520 of that thousand into savings. Edmonton tax accountant says on the other hand, once business owners are paying only 11%, that same thousand dollars means that they would be able to put 370 more dollars away and save $890 total every single month. This is a huge amount of money that a business owner can save each month once they incorporate. This is extremely important because business owners need to be able to purchase assets in their business, and canít always rely on getting approved for financing, because the longer a business has been in operation, the harder it is for them to qualify for loans says Edmontons tax accountant.

In addition to being able to save more money, businesses can also eliminate paying CPP on top of their tax if they are not incorporated. Businesses that make about $50,000 a year, have to pay roughly 10% on taxes for CPP. Entrepreneurs have to pay not only the employee portion of CPP, but the employer portion if they are not incorporated. Edmontons tax accountant says simply by incorporating their business, business owners can eliminate this tax payment, and save $5000 per year for their business.

There are other secondary benefits of incorporating says Edmonton tax accountant and they are, reducing their personal liability in the business, because the corporation takes on a certain percentage of liability, protecting their tradename, be able to more easily qualify for financing, getting their business a certain amount of legitimacy, as well as being able to get hired on at job sites where companies have insisted only independent contractors who are incorporated can get hired.